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The Effect of Oil Prices on Industrial Production in Oil-importing Countries: Panel Cointegration Test

Author

Listed:
  • Aigul Kalymbetova

    (Department of Finance and Accounting, Khoja Akhmet Yassawi International Kazakh-Turkish University, Turkestan, Kazakhstan,)

  • Zhanture Zhetibayev

    (Department of Economics, Khoja Akhmet Yassawi International Kazakh-Turkish University, Turkestan, Kazakhstan,)

  • Raushan Kambar

    (??? TRENCO R&D , Nur-Sultan, Kazakhstan,)

  • Zhandos Ranov

    (Eurasian Research Institute, Khoja Akhmet Yassawi International Kazakh-Turkish University, Almaty, Kazakhstan)

  • Bibigul Izatullayeva

    (Department of Management and Leadership, Khoja Akhmet Yassawi International Kazakh-Turkish University, Turkestan, Kazakhstan.)

Abstract
The industrialization levels of the countries are an indicator of development. Countries trying to increase their production in the industrial sector prefer to have access to energy in a cheap and easy way. However, economies that do not have sufficient energy reserves may be affected by the changes in energy prices since they will import the necessary energy input. Although there are many studies discussing the effects of energy or oil prices on macroeconomic variables in countries, the research based on industrial production is limited. In this study, the long-term relationship between the changes in oil prices and industrial production in the ten most oil-importing countries (China, Germany, India, Italy, Japan, Netherlands, South Korea, Spain, United Kingdom and United States) was analyzed by Pedroni, Kao and Johansen Fisher cointegration tests. According to the empirical findings of the study, it is concluded that the relationship between the industrial production of oil importing countries and oil prices is positive. This situation can be interpreted as these countries with high levels of industrialization process the crude oil and market the products they produce to foreign countries more profitably.

Suggested Citation

  • Aigul Kalymbetova & Zhanture Zhetibayev & Raushan Kambar & Zhandos Ranov & Bibigul Izatullayeva, 2021. "The Effect of Oil Prices on Industrial Production in Oil-importing Countries: Panel Cointegration Test," International Journal of Energy Economics and Policy, Econjournals, vol. 11(1), pages 186-192.
    • Handle: RePEc:eco:journ2:2021-01-24
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    References listed on IDEAS

    as
    1. Basher, Syed A. & Sadorsky, Perry, 2006. "Oil price risk and emerging stock markets," Global Finance Journal, Elsevier, vol. 17(2), pages 224-251, December.
    2. Olivier J. Blanchard & Jordi Galí, 2007. "The Macroeconomic Effects of Oil Price Shocks: Why Are the 2000s so Different from the 1970s?," NBER Chapters, in: International Dimensions of Monetary Policy, pages 373-421, National Bureau of Economic Research, Inc.
    3. Olivier J. Blanchard & Jordi Gali, 2007. "The Macroeconomic Effects of Oil Shocks: Why are the 2000s So Different from the 1970s?," NBER Working Papers 13368, National Bureau of Economic Research, Inc.
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    Cited by:

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    3. Sarit Maitra & Vivek Mishra & Sukanya Kundu & Manav Chopra, 2023. "Econometric Model Using Arbitrage Pricing Theory and Quantile Regression to Estimate the Risk Factors Driving Crude Oil Returns," Papers 2309.13096, arXiv.org, revised Oct 2023.
    4. Borozan, Djula & Lolic Cipcic, Marina, 2022. "Asymmetric and nonlinear oil price pass-through to economic growth in Croatia: Do oil-related policy shocks matter?," Resources Policy, Elsevier, vol. 76(C).

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    More about this item

    Keywords

    oil price; import; industrial production index; panel cointegration; FMOLS; DOLS;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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